Liquidity reallocation

Обзор облигаций 24.02.2015 Last Friday's cash flows did little to bolster liquidity despite it being the final day for quarterly tax payments. Broader banking sector liquidity slid UAH0.04bn to UAH52.50bn yesterday as banks' correspondent accounts with the NBU increased UAH1.16bn to UAH33.32bn and total CDs outstanding declined UAH0.99bn to UAH13.66bn. Total local currency debt repayments scheduled for the next 30 days slid UAH0.22bn to UAH5.52bn yesterday. KyivPrime interest rates declined: the KyivPrime ON interest rate slid 25bp to 17.00% while the KyivPrime 1M interest rate declined 50bp to 22.00%. Investment implications: The MoF's repayments and the NBU's decrease of CDs outstanding were the main source for the increase in banks' correspondent accounts with the NBU. As the NBU refinanced its ON loans and slightly increased their volume, liquidity did not decline significantly. However, as this week's month-end tax payments will require larger injections of liquidity, we expect liquidity to decline significantly.